Guy - Complaint No C06083 [2015] NZREAA 141 (30 March 2015)

Last Updated: 22 February 2016

In the Matter of Part 4 of the Real Estate Agents Act 2008

And

In the Matter of Complaint No: C06083

In the Matter of Michael Guy

License Number: 10029875

Licensee Two

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 30th day of March 2015

Complaints Assessment Committee: CAC405

Chairperson: Graham Rossiter Deputy Chairperson: Jane Parker Panel Member: Geoff Warren

Complaints Assessment Committee

Decision finding unsatisfactory conduct and Decision to take no further action

1. The Complaint

1.1. On 8 September 2014 the Real Estate Agents Authority (the Authority) received a complaint against Michael Guy (Licensee One) and Licensee Two from the Complainants.

1.2. Licensee One is a licensed salesperson and Licensee Two is a licensed agent under the Real Estate Agents Act 2008 (the Act) and at the time of conduct were engaged by Mackys Real Estate Ltd trading as Bayleys in the North (the Agency).

1.3. The complaint relates to a property (the Property).

1.4. The details of the complaint are that Licensee One, appraised the Complainants’ Property on

13 February 2014 as between $1.5-$1.8 million, with a listing authority signed on the same date for an asking price of $1.7 million. This was on the basis of an expected “quick sale” (the Complainant’s words). The agency agreement began on 26 February 2014 and was for a one month period. Following an agents’ viewing on 4 March 2014, Licensee Two, the Branch Manager, raised concerns with Licensee One about the price and subsequently rang the Complainant, voicing her concern and stating that the appraisal range should have been in the range $1.1-1.3 million, with a reduction in asking price to $1.295 million agreed to. Marketing material had already been produced and gone into the public arena at the original

$1.7 million asking price. The Complainant further alleges that the price was changed by hand on the printed advertising (from $1.7 million to $1.295 million), suggesting to the market that there was something wrong with the Property. The Complainants say they subsequently had the Property appraised by other agents at between $800-900,000.

1.5. Further to the above, the Complainants allege that the Licensees failed to exercise appropriate professional care in giving an appraisal, that they relied on information which was based on property sales in an area some 17km away from the subject Property, closer to the city, and consequently of a higher value.

1.6. The Complainants requested the following remedies, namely:

a) ’Damages’ of $40,000 plus GST (The Authority facilitator has advised the Complainants that ‘compensation’ is not able to be awarded by a Complaints Assessment Committee); and

b) the difference between the actual sale price realised on the sale of the subject Property

and the $1.3 million listed price

1.7. The Licensees responded to the complaint against them. In particular, Licensee One commented that when he initially visited the Property, although it was in an unfinished state, he considered it had significant potential, being a superior character villa, and once landscaping and other improvements were completed, it would have significant appeal. He further said that he could find no similar style of properties in the area and so compared it to similar style, but landscaped properties in another area some 17km away. Licensee Two commented that she was, at the relevant time, informed by Licensee One that he had appraised a “lovely villa”. However on viewing the Property with fellow salespeople on 4

March 2014, she realised it had been over-priced. She took steps as soon as practicable to mitigate the situation by ringing the Complainant, suggesting a price reduction and offering to refund their marketing fees. Licensee Two also agreed to cancellation of the agency.

2. What we decided

2.1. On 9 October 2014 Complaints Assessment Committee 308 considered the complaint and decided to inquire into it under section 78(a) of the Real Estate Agents Act 2008 (the Act).

2.2. On 3 December 2014 Complaints Assessment Committee 308 was disestablished.

2.3. The complaint was referred to Complaints Assessment Committee 405 (the Committee).

2.4. The Committee considered the original complaint afresh and made a decision to inquire into the complaint.

2.5. On 30 January 2015 the Committee held a hearing on the papers and considered all the information that had been gathered during the inquiry.

2.6. The Committee found the Licensee One, has engaged in unsatisfactory conduct under section 89(2)(b) of the Act. It further found that Licensee Two had taken all reasonable steps to correct and mitigate the over pricing once she became aware of it and, therefore, under section 89(2)(c) of the Act, resolves to take no further action with regard to the complaint against Licensee Two.

3. Our reasons for the decision

The Committee found, pursuant to section 72(a) of the Act, that Licensee Michael Guy’s actions fall short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee.

In addition, consideration is required of the following Rules 5.1, 10.2 and 10.3 of the Real

Estate Agents Act (Professional Conduct and Client Care) Rules 2012.

3.1. The Committee concluded:

a) That Licensee One, failed to comply with his obligations pursuant to rules 5.1 and 10.2 of the rules in respect of the provision of a market appraisal. In particular, rule 10.2(c) requires that an appraisal be supported by comparable information on sales of “similar land in similar locations.” Licensee One did not do what these rules require. Rather, he based his appraisal on a list of comparisons of historic sales from an area that were inconsistent in value with the Complainants’ location.

b) That he also failed to act in the best interest of the Complainants by crossing out the original price on marketing material and handwriting the amended price thereby, in the Complainants’ words “giving the impression there was something wrong with the Property”.

Reason One

3.2. The Committee can only assume by the evidence given, that Licensee One visited and appraised the Complainants’ Property on his own on 13 February 2014. He provided a written appraisal together with ‘comparables’ to the Complainants on 15 February 2014 which the Complainant accepted. They then signed an exclusive agency with Licensee One for a one month period commencing 26 February 2014 and ending on 28 March 2014. Licensee One submits that he struggled to find ‘comparables’ to the subject Property, which was a fully renovated and extended villa with no external landscaping or out buildings. He therefore sought and used historic sales from an area some 17km away, closer to the city and, as stated, of a higher value. The Committee perused this appraisal report and found only 2 of 22 properties referred to by Licensee One in his report came within the $1.7 million mark which the Complainants’ Property was listed at “for a quick sale.” The balance was in the region $1-$1.65 million. Evidence was provided by the Complainant of an appraisal provided by another real estate company, dated May 15 2014, showing some 21 sales of lifestyle properties within the area between the dates August 2013 and March 2014, and generally concurring with the eventual sale price of $840,000 of the Complainants’ Property. While it is recognised that appraisal is not an exact science, and that Licensee One has some five years real estate experience, it is fair to say his appraisal fell substantially short of his obligations under rules 5.1 and 10.2. It does appear to the Committee that Licensee One may not have been familiar with the area or, indeed, value of lifestyle blocks such as that being sold by the Complainants. It would have been prudent, if not essential, in these circumstances for him to have sought the advice of one or more of his colleagues, or his manager Licensee Two, prior to submitting an appraisal in writing.

Reason Two

3.3. It is accepted that marketing material is generally pre-printed and of a high quality standard.

It is also acknowledged that it can take time to have such material professionally printed. With some three weeks left of the agency period (from the date when the price was adjusted) it might not have been possible to have these reprinted with the amended price only. However, it would be reasonable to expect an in-house version to have been printed. While this complaint is secondary to that discussed in “Reason One” above, it does show a degree of unprofessional conduct on Licensee One’s part.

4. Request for submissions on orders: Licensee One

4.1. The Committee will conduct a separate hearing on the papers to decide what orders, if any, should be made under section 93 of the Act. Refer to the Appendix of this decision.

4.2. The Complainant is to file submissions (if any) on what orders should be made within 10 working days from the date of this decision. These submissions, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.

4.3. The Committee requires the CAC Administrator to obtain a record of any previous disciplinary decision in respect of the Licensee and, if any such decision exists, provide it to the Committee.

5. What happens next

5.1. The Committee will consider all submissions and issue a decision on orders.

Your right to appeal

5.2. In the matter of Licensee One, the Committee has yet to finally determine this complaint because the Committee is yet to determine what orders should be made, if any.

5.3. The Committee considers that the 20 working day appeal period does not commence until it has finally determined the complaint against Licensee One by deciding what orders should be made, if any.

5.4. In the matter of Licensee Two, if you are affected by this decision you may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date of this decision. Your appeal must include a copy of this decision and any other information you wish to the Tribunal to consider in relation to the appeal. Refer to Appendix section 111.

6. Publication

6.1. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

Signed

Geoff Warren

Panel Member

For Complaints Assessment Committee 405

Real Estate Agents Authority

Date: 30 March 2015

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 89 Power of Committee to determine complaint or allegation

(1) A Committee may make one or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the

Disciplinary Tribunal:

(b) a determination that it has been proved, on the balance of probabilities that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a decision under section 80 with regard to a complaint.

Section 72 Unsatisfactory conduct

For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

Section 93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the Committee may do one or more of the following:

(a) make an order censuring or reprimanding the licensee;

(b) order that all or some of the terms of an agreed settlement between the licensee and the complainant are to have effect, by consent, as all or part of a final determination of the complaint;

(c) order that the licensee apologise to the complainant; (d) order that the licensee undergo training or education;

(e) order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint;

(f) order the licensee:

(i) to rectify, at his or her or its own expense, any error or omission; or

(ii) where it is not practicable to rectify the error or omission, to take steps to provide, at his or her or its own expense, relief,

in whole or in part, from the consequences of the error or omission;

(g) order the licensee to pay to the Authority a fine not exceeding $10,000 in the case of an individual or $20,000 in the case of a company;

(h) order the licensee, or the agent for whom the person complained about

works, to make his or her business available for inspection or take advice in relation to management from persons specified in the order;

(i) order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.

(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

Section 111 Appeal to Tribunal against determination by Committee

(1) A person affected by a determination of a Committee may appeal to the Tribunal against a determination of the Committee within 20 working days after the date of the notice given under section 81 or 94.

(2) The appeal is by way of written notice to the Tribunal of the appellant's intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and

(b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.

(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.

(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012:

Rule 5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

Rule 10.2 An appraisal of land or business must –

a) be provided in writing to a client by a licensee; and b) realistically reflect current market conditions; and

100. be supported by comparable information on sales of similar land in similar locations or businesses.
     

Rule 10.3 Where no directly comparable or semi-comparable sales data exists, a licensee must explain this, in writing, to a client.